With all the hard work that you’ve put into running your business during the time that you’ve owned it, it’s important that you sell for the right price and get a fair reward for all your blood, sweat and tears.
Whichever way you decide to proceed with the sale, investigate how you can best prepare beforehand. Even if you went through the process, increased your value by 10-20% – imagine the difference that money could make to you.
Planning is the key to success in a business sale, and during this part of the process you will consider many different tips to really make sure that this is the right choice.
Is now the best time to sell the business?
Only you can know the answer to this question but try to make the decision with your business brain and not your emotional brain. If you feel that there is an opportunity to improve your situation (and, in turn, the business’ performance) then you should seriously consider the steps to making it happen.
The early days are a fantastic time to sit down with your legal advisor and make them aware of your plans to sell. It’s also a great idea to check your current lease, and make sure are good terms remaining – or at least the option to renew. Getting these basic steps underway may take longer than you think, so it’s important to get a head start as soon as possible.
Do you know what the business is worth in the current market?
This is where a broker comes in. Many factors go into valuing a business, and a professional broker will have access to industry information including recent sales in similar markets, price ranges and location. Accurate advice is invaluable in the preparation phase, and – bonus! It is also the part where value you didn’t know you had can be added for a quicker sale down the line.
Imagine a buyer deciding between your business and another – with roughly the same profit, turnover and location. If you’re able to present all the information that the buyer needs, you are sending a clear message of systematic structure and organisation. This leads to buyer confidence in the continued successful performance after you’re gone, reducing risk in their minds.
Have you talked to your accountant?
If you’ve spoken with your accountant during the planning phase, then hopefully they’ve given you the next steps for bookkeeping while selling. If there is one area that will stall or damage a sale, it’s a buyer’s accountant finding something unappealing. The more work you can do in the front end to ensure the books are straight and all the figures add up to reflect the valuation – the better.
Up-to-date profit and loss statements, balance sheets and tax returns are all suggested as helpful assets to include in the Information Memorandums that your broker will send out to potential buyers.
What will happen to your information?
One of the things that we do at Nikki Katz is prepare confidentiality agreements that can be sent out in the early stages, to help filter out any time wasters and keep your financial information private. These documents also cover you legally in the event any confidential information be disclosed. Once you have a buyer interested in the business with documents in hand (provided by your broker of course), it will be easy to share the required information to allow the buyer to carry out their due diligence.
What are the final steps?
After receiving an offer on the business, you will need to draft a Heads of Agreement document, instructing legal representation for each side of the transaction. As the deal progresses you will need to coordinate with your lawyer, as well as potentially the managing agent for your landlord.
Importantly, this is just an overview of the business sale process. Every sale is different, but with Nikki Katz she consistently strive to provide you every detail to ensure this time of your life is stress-free and seamless. For further information, please get in touch with her – she would love to help.